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In the first six months of Donald Trump’s presidency, Merck CEO Kenneth Frazier appeared alongside Trump at least three times at press events, one of which commemorated the first and only meeting of the president’s Manufacturing Job Initiative (better known at the president’s “Manufacturing Council”). Then by August 2017, after tragic events surrounding a white supremacist rally in Charlottesville, Virginia, and a press event in which Trump condemned violence “on many sides,” Frazier became the first CEO to resign from the Council in response. His action immediately elicited an angry tweet from the president that disparaged the CEO and his company. Two days later, the Council disbanded completely. This short case describes a CEO’s act of conscience, and suggests some of the potential risks of such outspokenness.

This case explores Lotte Group’s challenge of how to respond to Chinese government pressure in 2017, following the Group’s February decision to transfer land to the South Korean government, on which Seoul intended to deploy the U.S.-built THAAD missile defense system. Within a week of the deal’s announcement, the Chinese government had effectively caused 23 Lotte supermarket stores in China to shut down. Concurrently, however, South Korea’s political crisis climaxed with President Park’s replacement by the less hawkish Moon Jae-in. This “B” case chronicles the mounting losses in Lotte’s China business between March and September 2017, also a period in which bilateral relations between China and South Korea began to warm under President Moon, leaving South Korea’s commitment to a full THAAD deployment in some doubt. Against this uncertain backdrop, Lotte’s senior-most executives and board members had to reevaluate Lotte’s previously strong commitment to the China market.

Zelleke, Andy, and Brian Tilley. "In the Eye of a Geopolitical Storm: South Korea's Lotte Group, China and the U.S. THAAD Missile Defense System (B)." Harvard Business School Supplement 318-023, January 2018.
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By late 2016 and early 2017, Lotte Group, a South Korean chaebol (large family-controlled business group) had become embroiled not only in the domestic political turmoil surrounding President Park Geun-hye, but also—uncomfortably—in a four-country geopolitical storm. Amid rising tensions with North Korea, the South Korean government had agreed to deploy a U.S.-built anti-missile defense system known as THAAD (Terminal High Altitude Area Defense). The THAAD deployment had been strongly advocated for by Washington, Seoul’s treaty ally, and equally vehemently opposed by China—South Korea’s giant neighbor, with which Seoul had developed close economic ties and, in recent years, much improved political relations. In late 2016, the Park government decided that THAAD should initially be deployed on a particular property then in use as a privately owned golf course. The golf course’s owner happened to be Lotte Group. The case highlights the multifaceted, complex decision facing Lotte Group’s leadership: how to respond to the Park government’s national security-based request to transfer the land, while also taking into account China’s outspoken opposition to THAAD—seen in Beijing as impairing China’s own national security. As of 2016, Lotte Group had extensive operations, and even bigger aspirations, in the massive China market. As Lotte Group’s leadership grappled with its imminent decision at the end of 2016 and into 2017, the costs of defying Beijing were becoming more apparent, with the Group’s Chinese supermarkets hit by consumer boycotts and a raft of citations by Chinese authorities for fire code and other infractions.

Zelleke, Andy, and Brian Tilley. "In the Eye of a Geopolitical Storm: South Korea's Lotte Group, China and the U.S. THAAD Missile Defense System (A)." Harvard Business School Case 318-022, December 2017.
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